Supply chains can become increasingly complex, especially at the global level. Working with multiple third-party logistics providers often impairs supply chain visibility, leaving companies struggling to gather the necessary data to resolve exceptions, take corrective actions, and improve processes.
A supply chain control tower offers companies the ability to gather and evaluate real-time data throughout the end-to-end supply chain via the use of a cloud-based artificial intelligence. When properly implemented, a supply chain control tower greatly increases supply chain performance.
What is a supply chain control tower?
First of all, a supply chain control tower isn’t a physical tower or object—it’s a centralized hub containing all the technology, organizational tools, and processes needed to capture data from all stages of the supply chain, from the manufacturer to the consumer.
The control tower uses real-time data to identify weaknesses and strengths within the supply chain, using predictive analytics to guide the network toward greater efficiency and improved processes. Supply chain control towers allow you to operate smarter and more efficiently throughout a complicated supply chain network. In doing so, you deliver greater benefits to your consumers while reducing costly exceptions.
What is the difference between control towers and traditional freight or distribution management?
Traditional freight and distribution management are usually managed from either the point of origin or product destinations and as such have physical locations. Supply chain control towers are not tied to a location, nor are they confined to a single part of the network hierarchy.
Instead, a control tower focuses on gathering and storing real-time data from the company and its third-party logistics provider. The tower offers a single point of contact for all data points, increasing supply chain visibility by using artificial intelligence systems to run real-time analytics.
On the other hand, traditional freight centers on transportation and distribution. With a control tower, your decision-making processes are informed by factors as diverse as freight forwarding, tracking, tracing, exceptions alerts, and delivery scheduling, among others.
In addition, a supply chain control tower can instantly aggregate data from inventory, production, and warehousing centers to guide improvements and mitigate exceptions with an efficiency that traditional freight distribution management infrastructures lack. These infrastructures are confined to and rely on human assets to drive their supply chain processes, which is slower, less efficient, and less reliable than using AI assets.
Supply Chain Control Tower
The Agility Supply Chain Control Tower is a 4PL solution that offers companies the ability to gather and evaluate real-time data. When properly implemented, a supply chain control tower is proven to increase supply chain performance.
Benefits of a supply chain control tower
With the ability to improve the capabilities of your supply chain management system, a control tower should not be overlooked when considering network solutions. Supply chain control towers aren’t the solution for every company’s supply challenges. For those organizations with complex supply chains and third-party logistics networks, however, a control tower brings multiple benefits.
How do control towers add value to supply chain management?
Control towers add value to supply chain management through easy access to big data and real-time analytics. Leveraging the power of supply chain data, a company can do the following:
- provide end-to-end supply chain visibility to all stakeholders
- minimize supply chain risk, costs, and exceptions
- encourage collaboration throughout the chain
- respond to and resolve supply chain disruptions in real time
- use predictive data for more accurate forecasting and decision-making
- track fuel consumption, vehicle speed, location, and delivery-time estimates
Why optimize the supply chain with a control tower?
Using a control tower to optimize your supply chain makes your company more agile as it can respond rapidly to market changes and customer expectations. Big data gathered and analyzed by the tower can result in a reduction of transportation costs and improved supply chain performance. The more efficient and cost effective your processes, the greater your chance of satisfied customers and repeat business.
How can companies benefit from the control tower?
Without a supply chain control tower, a company with a complex supply chain to manage is left to rely on human assets to manually compile information to guide improvements and mitigate exceptions.
Relying heavily on human assets to complete the tasks a control tower can do very quickly on its own is costly, time consuming, inefficient, and limited in terms of what is achievable overall. To add, collected data is left to human interpretation, leaving greater room for error.
The AI-driven systems of a control tower can not only instantly aggregate data but also connect it and expand it though predictive analytics and real-time data processing. These capabilities facilitate better decision-making across all parts of the supply chain, leading to cost reductions, more efficient operations, and less waste.
Data that a supply chain control tower can provide
Big data is a control tower’s stock-in-trade, covering all aspects of the transportation process, from on-time delivery and inventory levels to supply chain disruptions and exception management. Assisted by powerful machine learning processes, control towers inform and advise stakeholders throughout the supply chain, providing enhanced visibility and advanced analytics when you need them the most.
What should a supply chain control tower provide?
At a minimum, a supply chain control tower should provide the following:
- enhanced visibility of the end-to-end supply chain to all suppliers, subcontractors, transportation carriers, third-party logistics providers, and consumers
- real-time data gathering and information sharing
- real-time alerts for all supply chain disruptions and exception management
- predictive data analysis and advanced analytics
- automated decision-making supported by machine learning to allow the supply chain to self-correct as needed
Impact of a supply chain control tower on the supply chain
Control towers offer a software-as-a-service (SaaS) solution to companies dealing with complicated national and global supply chains. When properly executed, the impact of a control tower is far-reaching, affecting everyone from delivery drivers to supply chain executives.
What can a supply chain control tower do for your operations?
Control towers can change how you operate at all levels of the supply chain. The tower provides a central platform for examining the end-to-end supply chain, along with the ability to make real-time decisions based on the recommendation of data-driven artificial intelligence.
At the cross–supply chain level, a control tower automates network processes, running without the need for human intervention and freeing up supply chain professionals to focus on mission-critical supply issues.
What could the actual impact on your supply chain be if implementing control tower capabilities?
Examples of a control tower’s impact on supply chain management include the following:
- reduced time between exception identification and problem resolution
- reduced costs across all aspects of the supply chain
- a complete bird’s-eye view of the entire supply chain
- increased speed, reliability, and adaptability of the supply chain network
- increased sharing and collaboration with trade partners
- as-needed adjustments to trading terms and contracts
How would a control tower impact the last mile?
Fast, on-time delivery is expected from today’s consumers. In the critical “last mile” stage of delivery, improperly allocated drivers, speed, a lack of visibility, and even the weather can affect delivery times and, by extension, customer satisfaction. Today’s consumers are not patient—they expect the fastest possible delivery times.
By continuously analyzing supply chain data, a control tower SaaS solution can improve last-mile efficiency, facilitating the best possible delivery routes while keeping customers informed of the status of their impending deliveries.
What is the ROI for a supply chain control tower?
Like any SaaS solution, a supply chain control tower isn’t cheap. Once one is properly implemented, however, most companies see an increased ROI well within a year due to reduced costs, improved processes, and increased interchain communication.
Positives and negatives of a supply chain control tower
The positives and negatives of a supply chain control tower need to be carefully considered. Not all supply chain solutions meet every company’s needs.
What are the risks in implementing a supply chain control tower?
One of the greatest risks of implementing a supply chain control tower is trying to do so without first standardizing processes with your supply chain partners, especially in situations where the supply chain has grown organically.
Different streams in your supply chain may use very different processes—two different warehouses, for instance, may have differing inventory criteria, different technological systems, and different processes. Isolated and siloed points of data at different locations will produce very different results when analyzed. For accurate supply chain management, your control tower needs to have a standardized foundation.
What are the pros of a supply chain control tower?
Supply chain control towers offer cloud-based solutions to big data management. The system can quickly identify issues and opportunities, sending automated alerts to all relevant stakeholders. As a cloud-based solution, a control tower offers as much security as a data aggregator can provide and still be online.
While saving costs, control towers offer continuous, automated process improvements through real-time analytics that adapt to new data. At the same time, they offer ongoing improvement recommendations rather than limited one-time recommendations.
What are the cons of a supply chain control tower?
Supply chain control towers are complicated systems. Accurate data retrieval and analysis is key to success. Despite advancements in the field of machine learning, artificial intelligence cannot recommend improvements without accurate, standardized data.
Remember as well that as a cloud-based solution, a control tower needs robust defenses against data breaches and hacking. The security of your data is only as strong as that of your weakest supply chain partner.
That said, we’re far off from perfect technology—there isn’t yet an AI-driven control tower system out there that doesn’t require human assets to automate and oversee its more complex components. As you assemble a supply chain control tower, be on the lookout for qualified, skilled professionals to maintain it. More on that below.
What are the cost savings from implementing a supply chain control tower?
The cost savings of implementing a supply chain control tower are difficult to universally calculate without an understanding of a company’s individual supply chain. That said, up to a 75 percent reduction in expediting costs is certainly possible, along with the savings associated with fewer stockouts and improvements in on-time delivery.
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Integrating a supply chain control tower
The integration of a supply chain control tower is both involved and challenging. The process takes a high-end view of supply chain management, software, and technology that not every company can meet without assistance.
What is the process for integrating a supply chain control tower?
A robust supply chain should consider the following three factors before setting up a supply chain control tower:
- All supply chain partners and contractors must be willing to collaborate on and adopt a set of standardized end-to-end methodologies.
- Critical supply chain skills must be centralized to provide the best regional and global efficiency. This may require the hiring or training of supply chain professionals.
- An agile, automated decision-making operating model must be in place to quickly and efficiently identify issues and causes, calculate responses, and act on those responses.
These factors must be considered throughout the creation of a control tower, which progresses through the following steps:
- Visibility improvement: The first step is to complete simple, reactive fixes to improve supply chain visibility. Such fixes should be completed without major disruption to the existing chain.
- Integration of information technology: Once supply-chain visibility is improved, integrating information technology into the supply chain must occur for the subsequent processes to happen.
- Performance monitoring: Next comes the launch of data-based decision-making capabilities, with a standardized set of key performance indicators, logistics data, and basic analytics. At this point the most important factor is data gathering for future use.
- Horizontal processes: After the control tower is set up to monitor supply chain performance, focus switches from managing vertical silos to managing horizontal processes.
- Synchronizing the network: At this stage, data flows unhindered to the tower, where machine learning can perform complex real-time and predictive analysis.
How long does it take to set up a supply chain control tower?
Unfortunately, there’s no one answer—every supply chain is vastly different and therefore requires different services from a supply chain control tower. The length of the supply chain itself typically doesn’t have the biggest impact on control tower assembly times.
Rather, assembly times are predicated on the number and nature of all moving parts—from raw material transportation to final delivery—that come together to form a supply chain. In other words, the more complex a company’s supply chain is, the longer its control tower takes to set up.
Can it be outsourced?
Many would argue a control tower should be outsourced. Few companies have the skills, technology, and resources needed to build their own control towers. Outsourcing gives you access to proprietary chain management systems, which will be maintained and updated by the third-party provider. Outsourcing allows for faster tower integration and results.
What kind of support and maintenance is expected?
A well-assembled supply chain control tower can, for the most part, maintain its own systems—but complex IT systems can’t be 100 percent self-sufficient. Exceptions to the rule can happen, and system errors are possible.
In the event a system error occurs, you’ll want a team of IT technicians and cloud and AI architects on standby to troubleshoot and fix the problem as soon as possible. The longer your control tower is out of commission, the more costs your company will soak up to fulfill its customer obligations without your control tower’s guidance.
Contact an Agility Expert today.